The United States has well-developed jurisprudence favoring enforcement of foreign arbitration awards as the Federal Arbitration Act (FAA) implements the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly referred to as the New York Convention. So how did Mont Blanc Trading Ltd.’s action to enforce a foreign arbitration award that had been confirmed by a British court recently get thrown out of the Southern District of New York for lack of subject matter jurisdiction? Because Mont Blanc styled its petition as one to enforce the British court’s judgment that confirmed its foreign arbitration award, rather than the arbitration award itself. Mont Blanc Trading Ltd. v. Khan, 13-cv-700(AJN), 2014 WL1116733, at *1 (S.D.N.Y. Mar. 20, 2014).
Pursuing enforcement of the British court judgment rather than the underlying foreign arbitral award prevented Mont Blanc from establishing subject matter jurisdiction for the action. Mont Blanc was unable to rely on 9 U.S.C. § 203 of the FAA, which provides subject matter jurisdiction to enforce foreign arbitration awards governed by the New York Convention. Mont Blanc, 2014 WL1116733, at *1. Instead, Mont Blanc attempted to rely on the New York statute governing enforcement of a foreign court judgment to assert subject matter jurisdiction. Id. The Southern District confirmed, however, that there is no federal question jurisdiction to hear a petition to enforce a foreign court judgment and that it is a matter of state not federal law. Id. Both parties were aliens and so diversity jurisdiction did not exist for Mont Blanc’s petition either — Mont Blanc was from the Republic of Mauritius and the respondent was a Pakistani national living in the United Arab Emirates. Id. at *2.
Mont Blanc’s attempt to enforce the British court judgment rather than the underlying foreign arbitral award also took the matter outside the more uniform, pro-enforcement, New-York-Convention-based regime and made it subject to non-treaty-based state-specific law – in this case, Article 53 of New York’s Civil Practice Law and Rules, New York’s version of the Uniform Foreign Money Judgment Recognition Act (UFMJRA). These statutes have broader grounds for non-enforcement than the New York Convention. The New York statute for example, will not enforce the foreign judgment if it conflicts with another final and conclusive judgment or for forum non conveniens in cases where jurisdiction was based on personal service — if the foreign judgment was from a court that was a “seriously inconvenient forum for the trial.” Also, while not an issue in New York, statutes in some states require reciprocity – the state courts, e.g., Massachusetts, will not enforce court judgments from countries that do not enforce United States judgments.
As the Mont Blanc decision demonstrates, prevailing parties in a foreign arbitration seeking to collect on their arbitration award in the United States should enforce their award pursuant to the New York Convention and the FAA and not seek to enforce in the United States any foreign court judgments they obtain subsequently recognizing or enforcing their award.
Please feel free to contact the authors, any of the attorneys in the International Dispute Resolution Practice, or your regular point of contact at McKenna Long & Aldridge if you have any questions concerning the enforcement of foreign arbitration awards and foreign court judgments.
Further information concerning the enforcement of foreign arbitral awards generally is available in Chapter 11 of International Government Contract Law (1st ed. 2012 & Supp. 2013) by Allen Green of McKenna Long & Aldridge LLP. Further information on specific issues involving foreign arbitral award enforcement is available in articles authored by William O’Brien and Ivan Bilaniuk of McKenna Long & Aldridge LLP, entitled “Recent Developments in the Forum Non Conveniens Defense to the Enforcement of International Arbitral Awards,” Bloomberg BNA U.S. Law Week, (April 2, 2013); and “The Stay As A Challenge To Enforcing Int’l Arbitral Award,” Law 360, (September 12, 2012).